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March 10, 2022
2022-0399

TE/GE director suggests contacting the IRS for corrections to the Business Master File Extract, refers applicants to IRS webpage for exemption application status updates

At a virtual TEGE Exempt Organizations Council meeting attended by EY on March 3, 2022, IRS Tax-Exempt and Government Entities division (TE/GE) director Robert Malone suggested that tax-exempt organizations (1) contact the IRS to request corrections to the Exempt Organizations Business Master File Extract (EO BMF), and (2) utilize IRS-website resources to check the status of applications for IRS recognition of tax-exempt status.

Master file issues

The EO BMF is an electronic database maintained by the IRS that contains information on tax-exempt entities, including each entity's name, employee identification number, current tax-exempt status and whether it may receive tax-deductible charitable contributions as an IRC Section 501(c)(3) organization. Potential grant makers and other donors often use the EO BMF to obtain information on the tax-exempt status of organizations to which they are considering donating.

Responding to a panelist's observations that erroneous information in the EO BMF on a particular charity may deter potential donors from making donations to that charity and may even make it difficult for an exempt organization to file its annual information return, Malone recommended contacting the IRS by telephone, mail or fax to request a correction. He explained that the IRS does not provide expedited handling for these correction requests because they are handled in the order received. Due to this first-come-first-served ordering, Malone also recommended against submitting repeated requests pertaining to the same issue.

Determination letters

Responding to reports that some applicants for recognition of tax exemption have waited unusually long to receive a response from the IRS, Malone said the agency is not aware of any delays in mailing exempt determination letters or development letters (used by the IRS to request more information to determine whether an organization qualifies as tax-exempt). Malone recommended that applicants visit the IRS's "Where's My Application for Tax-Exempt Status" webpage, which provides a list of IRS applications and postmark dates. The webpage explains that an application submitted after the applicable postmark date for that type of application has "not yet been assigned to an Exempt Organizations specialist. Keep checking this web page for updates and await IRS contact. There is no need to call." Malone echoed this message, emphasizing that applicants do not need to call the IRS to check on the status of their applications.

According to the "Where's My Application for Tax-Exempt Status" webpage, postmark dates for application forms as of March 10, 2022 are:

  • February 3, 2022 for Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3)
  • June 21, 2021 for Form 1023, Application for Recognition of Exemption Under Section 501(c)(3)
  • July 9, 2021 for Form 1024, Application for Recognition of Exemption Under Section 501(a) or Section 521
  • July 14, 2021 for Form 1024-A, Application for Recognition of Exemption Under Section 501(c)(4)
  • July 17, 2021 for Form 8940, Request for Miscellaneous Determination

The webpage also explains the steps applicants may take to inquire "by phone, fax, or mail" about applications that were submitted before the applicable postmark date. In a bold notice, the webpage notes: "The IRS can't respond to your inquiry through email."

Malone reiterated that the Internal Revenue Manual (IRM) currently:

  • Requires IRS specialists to phone an applicant two weeks before the due date of a development letter response to discuss the status of the response, provides the ability to grant extensions (up to 14 days)
  • Allows specialists to call an applicant for clarifications or resolution of minor issues
  • Allows a specialist to fax a copy of a development letter to an applicant

Malone further recommended that applicants check the Tax Exempt Organization Search (TEOS) page to see whether exemption determination letters approving their requests for exempt status have been posted, as the IRS sometimes posts these letters on the TEOS site before mailing them to applicants.

Implications

The IRS continues to face delays resulting from the COVID-19 pandemic. The IRS has not been updating the EO BMF consistently; the most recent EO BMF data posting date — February 14, 2022 — was the first update since December 2021. Tax-exemption applications (submitted through Form 1023) postmarked after June 21, 2021 have not yet been assigned to an Exempt Organizations specialist. With the required electronic filing of tax-exempt organization returns, the delay in updating the EO BMF may cause electronic e-filing rejections if a tax-exempt organization files an IRS form that lists an exemption status, name, address or employee identification number that the IRS has not yet updated in the EO BMF. Taxpayers should contact the IRS to make updates to their EO BMF record well before their filing deadlines, at (877) 829-5500. They should also consider utilizing the name-change and address-change mechanisms on the forms themselves (e.g., in Header B boxes on page 1 of Form 990) rather than trying to request direct changes to the EO BMF, as such changes will be automatically updated on the EO BMF if properly reported on the forms. If an organization is awaiting IRS recognition of its tax-exempt status, it could check the IRS's "Where's My Application for Tax-Exempt Status" and/or Tax Exempt Organization Search (irs.gov) webpages.

Please contact your Ernst & Young LLP tax professional with any questions.

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Contact Information
For additional information concerning this Alert, please contact:
 
Tax-Exempt Organization Services
   • Stephen Clarke (stephen.clarke@ey.com)
   • Kristen Farr Capizzi (kristen.g.farr.capizzi@ey.com)
   • Tiyesha Johnson (tiyesha.johnson@ey.com)
   • Jack Weil (jack.weil@ey.com)
 

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